News
Detailed opinion states case against German proposals
The European Commission has told Germany to revisit the draft German State Gambling Treaty or face the consequences.
EUROPE T
he European Commis- sion has warned the German authorities that their draft German State Gambling Treaty is in breach of EU law and has asked the Länder not to adopt it. Germany is now faced with the choice of rec- tifying the text or risk having an infringement procedure opened by the Commission. The decision has been warmly welcomed by the European Gaming and Betting Association (EGBA) which believes that while the the draft law appears to open the market for online sports betting operators from all EU member states, it in prac- tice reserves the market for the incumbent German monopolies.
EGBA secretary general Sigrid Ligné commented: “The draft German treaty has many provisions which are in conflict with EU law. But worse: it is clear that, taken together and espe- cially including a prohibi- tive tax on wagers from which the incumbent state monopoly is exempt, these provisions effectively slam the door in the face of EU operators from other member states and will in fact extend the monopoly
for offline to online games. The Commission must act quickly to stop this test case for its stated aim of a common EU framework for this sector.” Betfair’s chief legal and regulatory affairs officer Martin Cruddace also agreed with the European Commission’s rather criti- cal detail opinon: “From the very outset it was clear to us that the proposals put forward by the German Länder were discrimina- tory, anti-competitive and therefore incompatible with EU law. We are there- fore pleased and encour- aged to learn that the European Commission shares this same opinion. Although the federal states claim to be opening up the market for sports betting, the current draft treaty con- tained a raft of protection- ist measures designed to keep private online opera- tors out of the market.” The EGBA has several bones of contention with the State Treaty. It said that the limitation to seven of sports betting licences available is without justifi- cation given the state monopoly for sports betting is exempt from the require- ment to apply for a licence.
It argues that the licens- ing system ‘bundles’ offline and online sports betting together and applies a com- mercial viability test to would-be operators, thus putting online-only opera- tors at an automatic disad- vantage in applying for a licence.
It also dislikes the ‘exor- bitant’ tax of 16.67 per cent of the amount wagered is imposed on all operators, making online wagering uneconomic, and leading the EGBA to conclude that it is clearly intended to protect the current state monopoly on offline bets from online competition. It also highlighted the fact that private operators are limited to 350 outlets per licence, but that there are no such restrictions on the state-owned operators; certain casino games may be offered online but only by incumbent land-based casino operators; and the fact that the state monop- oly is exempt from market- ing restrictions that are placed on other operators. The EGBA added that the licence fee will favour those applicants with land-based operations that attract higher margins and appears to be unrelated to the costs incurred to deliver and then maintain the licence. The State Treaty cannot be enacted until 16 August 2011, which leaves the German government in the position to carry on regard- less or come up with a new regulatory approach that complies with EU law. Iron- ically, the one dissenting voice from the German regions on the Treaty, Schleswig Holstein, already has one. The alternative gambling law has been designed to foster a com- mercially viable sports betting market for EU- licensed operators, thereby removing the attractions of the black market for con- sumers. The Commission has raised no objections to the law and it enjoys the support of the gambling industry. However, adop- tion of Schleswig Holstein’s approach will require a huge about turn from the other Länder.
2 BettingBusinessInteractive • AUGUST 2011
SPORTINGBET, WHICH HAS RENEWED ITS SHIRT DEAL WITH WOLVERHAMPTON WANDERERS, IS FLIRTING WITH LADBROKES
Sportingbet clear
Sportingbet appears to have replaced 888 in the affections MERGER
O
nline book- maker Sporting- bet appears to be paving the way for a taking over
by Ladbrokes after the firm revealed that it is consider- ing closing down its Turkish business. At the end of June, Sportingbet revealed that it has received a ‘highly pre- liminary approach from Ladbrokes’ which ‘may or may not lead to an offer being made’ for the firm. Ladbrokes also made a statement where chief executive Richard Glynn commented: “The board has set out previously a clear organic strategy for Ladbrokes. We also stated that we would explore
appropriate opportunities that may help us accelerate that process and bring ben- efits to our shareholders. These talks should be seen in that context and are highly preliminary.”
In a statement to the stock market, Sportingbet said: “Sportingbet notes the recent press speculation in relation to its Turkish lan- guage website business. The company confirms that, as part of its long term strategy of increasing the proportion of its business mix derived from regulated markets, it is currently undertaking a review to evaluate its strategic options in relation to its Turkish language website
business. This review may lead to an exit from this business.”
Such a move would defi- nitely make Sportingbet much more palatable to Ladbrokes shareholders, which has just seen the company’s senior manage- ment team reorganised for a second time under Glynn’s leadership. The new set up is a ‘cross-channel, cen- tralised structure which reflects the changes that have taken place within the business’ since Glynn arrived last year.
Moving forward Lad- brokes said it will be organ- ised into three operational groups; Customer Experi- ence, Channels and Prod-
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